The Power of Anecdotal Evidence

Which is more powerful? Statistical or anecdotal evidence? Or does the answer depend on the situation or whether the two are in synch or collide? Whenever you plan to relocate to a new country or think about leaving the one you live in, the answer to this question matters greatly.

Country Analysis

When it comes to assessing the attractiveness of a country, the usual way is to look at all the numbers out there – GDP, inflation, currency, growth rate, unemployment, etc. Once you’re done with the basics, you might drill down in more specialized country rankings. For example, the World Economic Forum ranks countries based on competitiveness, which itself is composed of many very useful measures like the ease of doing business or development of the law. The advantage of all these statistics, if collected by reputable organizations, is that you will get a good snapshot of the situation when the data was collected. This could be yesterday, last year, or even earlier.

By definition statistics are data collected and sometimes a bit massaged to compare years prior or other countries. So far, so good. But should you make a decision of whether to move to a country or study there based only on official statistics, or should you believe in the power of anecdotal evidence?

Conflicting Information

This is actually a pretty loaded question. Let’s assume somebody in Spain told you in 2010 that many newly built homes are non-occupied, while official statistics still showed a healthy housing market. Or take Greece today, where official numbers are still not great, but anecdotal evidence from Athens says that investments in derelict neighborhoods run high and there is a new optimism in the country. You now have conflicting information – do you trust the statistics, or rely on what you could call hearsay and individual opinions? These individual observations and statements might be based on very limited experience, or driven by a personal agenda (e.g., to let a country appear better or worse), and are often hard to verify.

The Statistics – Anecdotal Evidence Matrix

Let us put the four combinations into a matrix. On one axis, we put what statistics tell us, on the other what hearsay, stories, gossip, and any other unofficial qualitative information tells us.

Two quadrants are easy for us to interpret. If both official numbers and private news coincide, either good or bad, we can with a great confidence believe in the assessment. While it does not tell us anything about future changes, it would be hard to justify a different assessment as an outsider. Thus, if both German statistics and your German friends rave about the great economy in 2013, it would be a safe bet to base decisions on that info. Whether you like to study, work, or possibly even invest there, you probably cannot do too wrong in the near future. Likewise, the opposite: if you hear horror stories from Iraq both in numbers and the news, you probably will not plan your move there.

Great Official Numbers, but Not-so-great Stories

Now it gets interesting. What if the stats still show how well a country is doing, but people you trust express discontent or you hear stories that do not match the party line? A good example is Germany in 2019 and 2020.

While on the surface the country appears to be doing great, a deeper look at news stories and talking to Germans will reveal a host of issues that will prove to be very challenging for the country in the near future. For instance, trains that run late and bridges at the risk of collapsing indicate significant underinvestment in infrastructure. Complaints about longer waiting times to see a doctor point to the strains of the healthcare system. New types and the frequency of violent crimes locals talk about indicate changes in society that you will not find in GDP data. Reading local news about attacks on Jews and politicians who dare to hold opinions outside the mainstream show a disturbing trend. Interviews with CEOs show that energy costs are the highest in Europe and strain consumers and business alike. All taken together, the anecdotal evidence tells you that most likely the country will face important challenges. Or more directly said – the country will go downhill.

Bad Official Numbers, but Optimistic Local News

This is my favorite scenario. It allows you to make great personal and financial bets with low risks and high return. Pick Portugal, Spain, Greece, or Ireland during the crisis of 2011 and 2012. Bad news all around. High unemployment. Skyrocketing debt. Greeks leaving the country. Failed governments.

That last thing you would do is to consider moving to any of these countries, right? Well, yes and no. The key would be to pick up the optimistic signals when visiting a country. Long before these countries showed a turnaround in the statistics, people on the ground sensed optimism and acted accordingly. From a wave of start-ups to retirees flocking to Portugal, from investors in Spanish properties to global companies sticking it out and investing in Ireland, the turnarounds could be sensed, smelled, and even read about through stories. If you had invested in or started a company in either of these countries right at the cusp of the turnaround, you could be a millionaire by now.

Takeaway

Looking at numbers and
statistics to analyze a country for whatever purpose is a great start. It often
it tells you all you need to know. But if the country is in flux and underlying
trends have not shown up in official statistics or worse, are suppressed by the
authorities, you need anecdotal evidence, stories, local news, eye witness
reports, and ideally your own reconnaissance on the ground. While the latter
might not be statistically valid, the information you get might still be
invaluable in spotting significant changes in the fortune and opportunities a
country offers. You might be able to get out before others do. Or, which is
more fun, you might be a first mover taking advantage of new opportunities if a
country is about to improve for the better.

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Hello! I am Michael Froehls and the founder of Go Global Be Happy. My nickname is The Global Wanderer. After seeing how many of my students are interested in living a more global life, I decided to start this blog. Having traveled to about 60 countries and worked, lived, and studied on several continents, I am excited to help others leverage our world. After a successful career in consulting and corporate America, I now teach Global Business & Global Marketing at the University of Texas at Austin. My passion has not changed - exploring and enjoying our world every day. Very thankful for my life in the US and my wonderful Colombian partner whom I met while working in Latin America.